Lower rate of return for large enterprises

13/09/2004 10:00

In 2001 and 2002 the average rate of return of all non-financial enterprises was around 7 percent. This is exceptionally low. Indeed it has not been this low since1977. In 2000 it was still over 20 percent.

Lower profits

Net profits for 2002 were around 20 billion euro. In 2001 they were still 22 billion euro, and in 2000 nearly 60 billion euro.

Rate of return non-financial enterprises

Rate of return non-financial enterprises

Small enterprises perform better

In the period 1992–2000 the rates of return of smaller enterprises did not differ much from those of large enterprises. After 2001, however, although all operating results came under pressure, smaller enterprises performed better than large ones.

Rate of return by sector

Rate of return by sector

Strong losses in communication sector

Profitability was lower in nearly all sectors in 2002 than in 2001. Moreover the differences between the sectors were considerable. The worst results were in the communication sector, as the UMTS acquisitions were written off.
The high rates of return in agriculture, fishery, mineral extraction and construction were also caused by relatively small amounts of capital, which pushed up the rate of return.

Net profits by sector

Net profits by sector

Highest rates of return in manufacturing

A few sectors did well in 2002. These included manufacturing, repair companies and trade, and to a lesser extent construction.
The profitability of business services was more sombre. This was nearly completely caused by the strongly increasing losses in the ICT sector. While profits in this sector were over 400 million euro in 2000, by 2002 the total loss amounted to just over 1.3 billion euro.
Losses were also substantial in the transport and communication sector.

Frank Bonger